Tax credits still needed despite shooting uptick

Ontario corp. reports spending in last year up 7% on 2003

TORONTO — Just months after the provincial government stepped in to bail out an ailing film and TV industry, the year-end numbers indicate that 2004 was not such a bad year after all.

The Ontario Media Development Corp. reported in its annual stats that film and TV spending in 2004 was C$934.5 million ($754 million) up 7% on 2003.

This after a furious spate of lobbying and Chicken Little protests by industryites led the provincial government in December to up the domestic tax credit to 30% (with an additional 10% for shooting outside of Toronto) from 20%, and foreign incentives to 18% from 11%. Quebec and British Columbia quickly followed suit.

So, was the province bamboozled and the boost unnecessary?

Absolutely not, say pundits. “A 7% increase from 2003, the worst year in recent history, really isn’t anything to get excited about,” says Donna Zuchlinski, manager of film for the OMDC’s industry development group.

The SARS scare made a mess of 2003, during which production plummeted 11% to $705.2 million. Compared to 2002’s total of $794.3 million, production in 2004 is still down 5%.

For many, 2004 was the leanest year in more than a decade. One line producer/production manager, who worked on just one Canadian independent feature in 2004, called it “the slowest I’ve seen in 18 years.”

Domestic spending dropped 11% to $361.6 million from 2003. Features dropped 56% to $32.1 million, and TV movies were down 34% to $40.5 million. (Series spending enjoyed the only increase — 6%, to $289 million.) The number of projects also decreased from 133 to 127.

Toronto Film Studios prexy Ken Ferguson believes it’s a direct result of Ontario tax incentives falling behind those of other provinces. SARs may have taken “Shall We Dance” to Manitoba in 2003, but it was Saskatchewan’s much more generous tax breaks (40%, compared to 20% for Toronto) that attracted Terry Gilliam’s “Tideland” in 2004.

Runaway production provided the backbone for Ontario’s bottom line jump. Foreign shooting was up 31% to $392.3 million. Of that, foreign feature spending leapt a staggering 139%, to $267.3 million. That included bigger ticket features such as “Cinderella Man,” and “Assault on Precinct 13,” but the actual number of foreign projects declined to 38 from 40.

“Yes, we got fewer films but bigger spenders, but they ended before the fall, and nothing was coming down the pipe,” says Ferguson. “Usually you can tell from phone calls and chatter that something’s coming. Well in November, the dollar was spiking, and we were hearing nothing.”

For its part, the province is satisfied that it made the right move. “There’s no doubt in our mind that the industry needed help,” says Guy Lepage, communications assistant to Madeleine Meilleur, Ontario’s minister of culture. “Sure, the latest statistics indicate an increase, but one could argue that there was nowhere to go but up. We’re very happy with the numbers, because it shows we’re climbing the hill once again.”

The announcement of the tax credits — and perhaps the stabilization of the Canuck loonie against the greenback — seem to be helping. Zuchlinski has noticed an uptick in scouting. “Many producers, both domestic and foreign, have said they’re coming because of the increase in tax credits,” she says.

“It looks like it’s coming back again,” agrees Ferguson. Whereas TFS would normally be looking into April or May shoot dates around this time, he says they’re booking earlier.

The Don Carmody screamer “Silent Hill” and “Sixteen Blocks,” with Bruce Willis, are gearing up to lense in Toronto this year.